house worth $0 now, trying to finalize divorce

[persfit2]

What is the name of your state (only U.S. law)? VA

My soon to be ex-spouse (together from 1997-2004) and I are having a difficult time with the only real asset we "own," our house. When we seperated in 2004, the house had $100k in equity, she did not want to sell. Now, with the market changes, the house is currently valued at what we owe (loan amount 220k, value 220k.) She thinks that for the short time that she contributed to the house payments from 1997-2004 she should be entitled to future profit if/when the house goes up in value. Does this make any sense? An asset valued at $0 divided by 2 is still $0, right? The most likely scenario is the house may sell for more later, but mostly because I will be buying down the debt over the next few years since I now live there and have always paid the mortgage, even while not living there.

Can anyone provide any clarity on the right way to move forward?

[Ohiogal]

Originally Posted by persfit2

What is the name of your state (only U.S. law)? VA

My soon to be ex-spouse (together from 1997-2004) and I are having a difficult time with the only real asset we "own," our house. When we seperated in 2004, the house had $100k in equity, she did not want to sell. Now, with the market changes, the house is currently valued at what we owe (loan amount 220k, value 220k.) She thinks that for the short time that she contributed to the house payments from 1997-2004 she should be entitled to future profit if/when the house goes up in value. Does this make any sense? An asset valued at $0 divided by 2 is still $0, right? The most likely scenario is the house may sell for more later, but mostly because I will be buying down the debt over the next few years since I now live there and have always paid the mortgage, even while not living there.

Can anyone provide any clarity on the right way to move forward?

So how are you going to refinance it into your name alone? If she is on the mortgage you have to refinance. How you going to do that? you will need most likely 20% down in order to refinance considering the economic climate. If you don't have that do you just expect her to remain on the mortgage risking her credit? If so, then she is entitled to future profits.

[mistoffolees]

Originally Posted by persfit2

What is the name of your state (only U.S. law)? VA

My soon to be ex-spouse (together from 1997-2004) and I are having a difficult time with the only real asset we "own," our house. When we seperated in 2004, the house had $100k in equity, she did not want to sell. Now, with the market changes, the house is currently valued at what we owe (loan amount 220k, value 220k.) She thinks that for the short time that she contributed to the house payments from 1997-2004 she should be entitled to future profit if/when the house goes up in value. Does this make any sense? An asset valued at $0 divided by 2 is still $0, right? The most likely scenario is the house may sell for more later, but mostly because I will be buying down the debt over the next few years since I now live there and have always paid the mortgage, even while not living there.

Can anyone provide any clarity on the right way to move forward?

If you can refinance it in your name and she's entirely off the hook, you can make a strong case that her share is zero. If, OTOH, you want her name to stay on the mortgage, she is entitled to compensation for her risk.

[persfit2]

I do not expect her to remain on the mortgage and am capable of refinancing. She's already getting cash out of my 401k. I told her that if she wants a cut of future profit, she can split the mortgage with me (obviously not what she wants to do.) My point is, if the house were sold today neither one of us would profit. Any money made from this investment will be based on my future risk. Why would she be entitled to any of that? She thinks that because she contributed to the mortgage (about 30% of payments for 6 years) in the past she should receive money for that...if that's legitimate, where is that money supposed to come from? I just think someone told her she should get something out of the house and now she's not budging. It's as if she's asking for her money back for having contributed to the mortgage?! Wouldn't this be like asking a company for my original investment back on stocks that are now worthless?

[mistoffolees]

Originally Posted by persfit2

I do not expect her to remain on the mortgage and am capable of refinancing. She's already getting cash out of my 401k. I told her that if she wants a cut of future profit, she can split the mortgage with me (obviously not what she wants to do.) My point is, if the house were sold today neither one of us would profit. Any money made from this investment will be based on my future risk. Why would she be entitled to any of that? She thinks that because she contributed to the mortgage (about 30% of payments for 6 years) in the past she should receive money for that...if that's legitimate, where is that money supposed to come from? I just think someone told her she should get something out of the house and now she's not budging. It's as if she's asking for her money back for having contributed to the mortgage?! Wouldn't this be like asking a company for my original investment back on stocks that are now worthless?

You're each entitled to half of the marital debt and half of the marital equity at the time of the divorce filing (or, sometimes, the time of the divorce decree). If she's not happy with that, then let the judge decide - and that's what he'll decide.

[persfit2]

That's what I thought but wanted to make sure I wasn't off-base in my reasoning.

[TinkerBelleLuvr]

You need a bonafide appraisal of the house, not just a "market analysis" from a realtor. If you are going that there currently is no equity, you need to prove it.